JPMorgan Starts Sigma Lithium Coverage With Overweight Rating

JPMorgan initiated coverage of Sigma Lithium with an Overweight rating and a C$20 price target, according to the company’s September 21 announcement. The bank argues the miner’s valuation does not fully reflect its growth prospects.

JPMorgan expects the lithium market to remain in deficit through 2029, with 2026 the tightest year and prices peaking in 2027. The bank points to rising demand, including from energy storage, as a support for prices.

The investment case also rests on expansion at Sigma’s Grota do Cirilo operation in Brazil. Its current annual capacity is 330,000 tonnes of lithium concentrate; the company targets 580,000 tonnes by the end of 2027 and 830,000 by the end of 2028.

Sigma says it expects to produce 240,000 tonnes over the next 12 months and 330,000 tonnes in fiscal 2027. Those targets depend on continued operating improvements and the delivery and commissioning of new equipment.

Recent results offer evidence of a stronger production pace. Sigma reported second-quarter output of 35,400 tonnes, up 52% from the first quarter, and a record 47% EBITDA margin.

JPMorgan’s thesis includes Sigma’s shift to managing mining operations in-house after earlier production and cost volatility. The bank says the change should make plant supply more consistent and help lower costs.

Risks remain beyond construction and ramp-up. Sigma has also disputed a preliminary Brazilian court ruling reportedly affecting its environmental licenses, saying its operations continue and it has not received formal notice of the ruling.